Reliable Power from Coal

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Published: Monday, 27 March 2017 12:11

BY STEVE FISCOR/EDITOR-IN-CHIEF

The first question that I get from people who know my proud affiliation with coal is: Do you really think Trump can save the coal miners? Until recently, my answer was the same as it was prior to the election: “No. Trump alone can’t save the coal business, but the opposing party said it would kill it.” After seeing what’s happening with job growth, however, my feelings have changed.

Obviously, with large quantities of low-cost gas, the gas and coal markets will remain soft for the next few years. If Trump follows through on plans to grow domestic production to make America energy self-sufficient, bringing more gas onto the market will not help the situation. In all likelihood, coal and gas will hold onto their one-third size slices of the electricity generating pie. But, what if the pie grew? The Energy Information Administration (EIA) reported that net power generation in the United States during December (the latest numbers available) increased 6.4% from the previous December. This occurred while the entire country experienced average temperatures. December 2015 was the warmest December on record, so a return to normal shows improvement.

The other surprising stat from the EIA is that electricity generation from coal increased in all regions of the country compared to the previous year, while natural gas generation decreased in all parts of the country, except for the Northeast. This increase in coal generation with a subsequent decrease in natural gas generation is mainly attributed to an increase in natural gas prices that occurred in December 2016. A slight increase in gas prices had a significant impact on the coal burned during December.

The U.S. Bureau of Labor Statistics reported that nonfarm payroll employment increased by 235,000 in February. The employment gains occurred in construction, private educational services, manufacturing, health care and mining. Yes, you read that correctly, “mining.” Manufacturing added 28,000 jobs in February. Over the past three months, manufacturing has added 57,000 jobs. Employment in mining increased by 8,000 in February, with most of the gain occurring in support activities for mining (+6,000). Mining employment has risen by 20,000 since reaching a recent low in October 2016.

While we are all excited to see the increase in mining-related jobs, it’s the increases in manufacturing jobs that we need to watch. As we have demonstrated many times in Coal Age, the weather has a marginal impact on base-load electricity demand compared to the demand from industrial and manufacturing facilities running around the clock. Those factories in Indiana and Michigan run on electricity. If the Trump administration could double or triple the jobs in the manufacturing sector by luring business back to the U.S., with tax incentives or shaming Tweets, the size of the energy pie will grow.

A growing energy pie bodes well for coal. Electrical power from coal is clean and reliable. The coal industry will not need to take land for pipelines to satisfy increasing demand. The transportation and distribution network is already in place. Restarting it creates more jobs, too. So, yes, the Trump administration could save the coal businesses and a lot of other businesses by repatriating jobs to the U.S.